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There is growing evidence on the importance of institutions for growth but limited understanding of the mechanisms of institutional divergence, persistence and change. Focusing on the judicial, starting from formalism indicators developed under the legal origin theory, but following different explanatory paths, we propose a thought experiment assessing reasonable preferences of judges and lawyers regarding formalism. We find a striking divergence, with lawyers showing preferences for high, and judges for low, formalism. This may generate institutional conflict, resistance to reforms and a dynamic equilibrium at an inefficient level. The analysis offers paths for reform, potentially addressing limitations of institutional approaches.